To create a Windows Azure Infrastructure-as-a-Service Virtual Machine you have several options. You can simply select an image from a “Gallery” which includes Windows or Linux operating systems, or even a Windows Server with pre-installed software like SQL Server.

One of the advantages to Windows Azure Virtual Machines is that it is stored in a standard Hyper-V format – with the base hard-disk as a VHD. That means you can move a Virtual Machine from on-premises to Windows Azure, and then move it back again. You can even use a simple series of PowerShell scripts to do the move, or automate it with other methods.

And this then leads to another very interesting option for deploying systems: you can create a server VHD, configure it with the software you want, and then run the “SYSPREP” process on it. SYSPREP is a Windows utility that essentially strips the identity from a system, and when you re-start that system it asks a few details on what you want to call it and so on. By doing this, you can essentially create your own gallery of systems, either for testing, development servers, demo systems and more. You can learn more about how to do that here: http://msdn.microsoft.com/en-us/library/windowsazure/gg465407.aspx

But there is a small issue you can run into that I wanted to make you aware of. Whenever you deploy a system to Windows Azure Virtual Machines, you must meet certain password complexity requirements. However, when you build the machine locally and SYSPREP it, you might not choose a strong password for the account you use to Remote Desktop to the machine. In that case, you might not be able to reach the system after you deploy it.